The new SABMiller CEO has his job cut out for him – by his predecessor
In the din of brewers’ corporate Newspeak, one voice has always stood out: Graham Mackay’s. While his colleagues preferred to drone on in a language that could have been some obscure Mongolian dialect for all we knew, the outgoing Executive Chairman and former CEO of SABMiller could be trusted to talk about issues that really mattered in plain English that even a dumb blonde understood – had she been interested in the consolidation of the brewing industry.
In an interview with Reuters (chapeau to our colleagues for getting Mr Mackay to sit down and talk) on the sidelines of the Consumer Analyst Group of New York conference in Boca Raton, Florida, on 19 February 2013, Mr Mackay, said that one of the biggest challenges facing Alan Clark, the incoming CEO of SABMiller, will be continuing to grow the business as strongly in a world with fewer acquisitions to make.
Mergers and acquisitions have "gotten stickier," Mr Mackay explained because there are fewer companies around that can be bought, driving up price expectations.
In a rare flash of modesty (or was he merely ironic?) Mr Mackay called the new generation of SABMiller bigwigs "much cleverer than I am… but it will get harder [for them] to drive out growth because the consolidation phase has passed its first flush."
Mr Clark, who is taking over from Mr Mackay at SABMiller’s General Meeting this year, joined South African Breweries in 1990 and became COO last year.
"The opportunity to bring on new businesses, integrate them and drive earnings… that opportunity is diminishing", Mr Mackay said. "Everywhere we are relying more on organic growth. And that’s a lot easier in some markets than in others."
Trust the hard-nosed Mr Mackay not to let the opportunity pass to comment on the latest mega-deal: the one between AB-InBev, Modelo and Constellation.
Mr Mackay said he expects the deal to ultimately get done. Exactly what BRAUWELT International has been saying.
"I would be personally surprised if AB-InBev doesn’t get this thing through one way or the other," Mr Mackay was quoted as saying. "Whether the major concession they made recently is enough to get it across the line, I have no inside knowledge."
Being on the top of his game, Mr Mackay did not fob off the Reuters interviewer when asked for his comments on the ultimate endgame in beer consolidation – the often speculated on takeover of SABMiller by AB-InBev.
"The decision of whether to do that or not is obviously not going to be mine", he said. "It’d be a huge and very expensive deal. Our job, as I’ve always said, is to make our business as expensive to buy as possible and that’s it."
But he gave his business a price tag in excess of USD 100 billion (EUR 76 billion), based on SABMiller’s current market capitalisation of about USD 80 billion plus about USD 17 billion of debt. He did not say which sort of premium SABMiller could draw – but it’s generally understood that it will be significant.
As for Mr Mackay’s own retirement plans – he will turn 64 this July – he expects to play a bit more tennis. He also will keep his seats on the boards of SABMiller, Reckitt Benckiser Group and Philip Morris International, which should be enough to keep him “out of mischief for a bit", he added.
Unfortunately, once he steps down, there will not be any more interviews with Mr Mackay as SABMiller’s corporate lawyers have surely put a muzzle somewhere in his contract.
His voice will be sadly missed.